RE:RE:RE:RE:RE:RE:RE:RE:Time for a strategic reviewriski wrote: Yes, this is the crux of the problem for the past year. EF capex is way more than they thought it was going to be. Hence the downward drift in FCF estimates from $1B at the time of the announcement. If I had to guess, I would say that Ranger juiced their production when putting themselves up for sale to optimize the sale price. This is easy to do with some aggressive engineering/fracking that also causes greater instability and more rapid decline. So they probably took over the property and discovered that it was producing far less oil at their own standard well parameters than what was initally used for all the financial calculations. So then Greiger is stuck with either egg on his face or he quietly pours cash into the assets to get them up to what was announced at acquisition. He chose the latter of course which everyone would do in that situation.
The question now remains: What is the capability of the EF assets? Are they up to speed and can we expect the growth advertised at acquisition without the ongoing monster capex bill? Or is this a capex intensive property that needs $60-$65 oil to be profitable?
The Canadian assets are very profitable, especially clearwater and duvernay. It's crazy to see posters here suggesting we sell those. They would garner a lot of interest, but that is where all our growth has come from. It's that growth that has masked the under performing EF assets to keep overall production flat.
It's a real shame Greiger decided to go big on an acqusition. If he just sat tight, this would be a double digit stock by now with next to no debt and probably a fat dividend. I think it still has that potential, but the EF assets have to deliver efficientlt for that to happen.
We wait.
JohnnyDoe wrote: AvInvestor wrote: Are you sure about that? BTE gets Brent pricing at ~$80/b now in eagleford. Though heavy oil yields a higher IRR if we see a price spike, WCS is unpredictable and could collapse if CNQ hikes production and crowds TMX.
I think BTE's heavy oil plays are the most economical in the portfolio
What I see is the EF chewing up more capex dollars than it's contributing in production. Not a lot mind you, but the %age of capex directed at the EF exceeds the %age of boe equivalents the EF is delivering. Will that continue? Would it look different with a CDN CEO instead of an American CEO?
They're clearly trying to drive production in the EF but at the moment they're spending ~800M in capex just to keep it flat. Would selling CDN assets to direct more capex at EF be a good play? Idk about that.
We paid roughly 2.5b for the Ranger assets. We're 2.5 B in debt. Oil properties have probably increased in value in the last 18 months. Selling all the EF, wiping the debt completely, and having left over cash might be the better play...while thanking Eric for his contributions
Riski, does the refrac success provide any insight into your question " Are they up to speed and can we expect the growth advertised at acquisition without the ongoing monster capex bill?"